James Myers of OAN
Friday, June 21, 2024 10:24 AM
U.S. existing home sales fell for a third straight month in May as rising mortgage rates and record prices discouraged many would-be buyers from buying at a time when the housing market is usually at its most robust.
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Existing home sales last month fell 0.7% from April to a seasonally adjusted annual rate of 4.11 million. National Association of Realtors (NAR) said in a statement on Friday.
Moreover, sales were down 2.8% compared to last year’s figure for May 2023. The latest sales figures were slightly higher than the 4.07 million units economists had predicted. FactSet.
“We had hoped we would see a real recovery this spring, but that hasn’t happened,” said Lawrence Yun, chief economist at the National Bureau of Economic Research.
Meanwhile, home prices have risen again for the 11th consecutive month. The national average sales price rose 5.8% year over year to $419,300, the highest price recorded since 1999. The latest data also shows prices are up a staggering 51% from five years ago.
Despite the decline in sales, home prices are still rising and the supply of properties on the market has reached its highest level in four years.
“This is a bit of a strange phenomenon,” Yoon said. “Home sales activity is slow, prices are at record highs, and homes still seem to have multiple buyers.”
The U.S. housing market has been slowing, dating back to a slump in 2022 when mortgage rates began to rise from pandemic-era lows.
Additionally, home sales fell dramatically last year to a 30-year low as the average interest rate on a 30-year mortgage soared to a 23-year high of 7.79 percent, according to mortgage specialist Freddie Mac.
Meanwhile, the average rate on a 30-year mortgage has remained around 7% this year, which is somewhat surprising given that rising inflation has forced the Federal Reserve to keep short-term interest rates at their highest levels in more than two decades.
Rising mortgage rates mean many homeowners who bought or refinanced their homes more than two years ago are now finding themselves unable to sell because fixed-rate mortgages could fall below 3% or 4%.
according to Real Estate Agent.comAs of the end of 2023, more than 50% of homes with a mortgage will have interest rates below 4%, and 87% will have interest rates below 6%.
The data showed there were an estimated 1.3 million homes unsold at the end of May, up 6.7% from April and 18.5% from May of last year.
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